10 Causes of Stock Loss In Stores And Retail Shops

Causes of Stock Loss. To achieve accurate profit measurement, the clerical or computer record in respect of each item of materials in stock must be in agreement with the actual stock held. This means that the actual stock must be physically counted and compared with the clerical or computer record. To do this effectively, there must be either a complete periodic stock count or some form of continuous stocktaking.

10 Causes of Stock Loss In Stores And Retail Shops

The former refers to a situation where all the stores items are counted at one point in time, whereas the latter involves a sample of stores items being counted regularly on, say, a daily basis.If there is continuous stocktaking, production is unlikely to be disrupted. Sometimes it may be found that the actual stock level is different from the clerical or computer records.

 Causes of Stock Loss for this may be as follows:

1. an entry having been made in the wrong stores ledger account or bin card;

2. the items having been placed in the wrong physical location;

3. arithmetical errors made when calculating the stores balance on the bin card, or stores ledger when a manual system is operated;

4. theft of stock.

When a discrepancy arises, the individual stores ledger account and the bin card must be adjusted so that they are both in agreement with the actual stock. Assume, for example, that the actual stock is less than the clerical or computer record. The quantity and value of the appropriate stores ledger account and bin card (quantity only) must be reduced and the difference charged to a factory overhead account for stores losses.

How To Prevent Stock Loss;Causes of Stock Loss.

The importance of training

As we have already pointed out, a key aspect to reduce shrinkage is training. Companies must have a detailed loss reduction plan that explains how to carry out the different operational and administrative procedures of the company. For all workers to know this plan, training or dissemination actions are a fundamental element. To offer such training, companies must seek formulas that are profitable and can be maintained over time. Face-to-face sessions should be a key part of a training plan, but e-learning tools or even the management of social networks can be used so that workers always have information about loss and recommendations to reduce it available.

In this sense, educating employees on how to act in different situations that may arise in an establishment has been shown to be a very effective weapon. To give an example, it is highly dissuasive that, in case of detecting a suspicious attitude on the part of a client, the employee offers to help him in his purchase.


Loss prevention is a constant challenge in which those at the top must combine all the technological and human tools at their disposal, in order to reduce it optimally. The person most responsible for loss prevention must have a high number of qualities: know how to analyze data, make process improvements and have technological and legal knowledge. In addition, they must know how the organization works and must be able to communicate and convince the different areas of the company with the aim of reducing losses.

by Abdullah Sam
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